Commission: Consolidate GI Bill Benefits, Delay Transferability

A blue-ribbon panel on military compensation and retirement recommended consolidating GI Bill programs and delaying the ability for troops to transfer the benefits to family members.

The Military Compensation and Retirement Modernization Commission released its long-awaited report on Thursday after a two-year review. It included 15 recommendations designed to give service members and their families more benefits options while saving the government an estimated $12 billion a year by around 2040.

Two significant proposals -- offering troops 401(k)-like retirement plans before 20 years of service and replacing Tricare with commercial health insurance plans -- would result in big savings for the Pentagon. Another -- consolidating GI Bill programs and delaying the transferability of benefits, a hugely popular feature of the program -- would do the same for the Veterans Affairs Department.

The VA would eventually avoid almost $5 billion in costs a year, more than a third of the government's estimated overall savings, if Congress adopted the idea, which commission members acknowledged is far from guaranteed. The effort would reduce "annual federal outlays, in FY 2016 constant dollars, by $4.8 billion, after full implementation," the report states.

Getting there, however, would require consolidating a complex set of educational benefits dating to World War II.

The military's numerous education assistance programs include the Post-9/11 GI Bill, the Montgomery GI Bill Active Duty, the Montgomery GI Bill Selected Reserve, the Reserve Education Assistance Program and tuition assistance. The programs are a huge draw to recruits -- nearly three in four say they join to receive education benefits.

The commission wants to preserve the most generous of these, such as the Post-9/11 GI Bill, and scrap others, including Montgomery GI Bill Active Duty (MGIB) and the Reserve Education Assistance Program (REAP), because they're redundant and, in some cases, unnecessarily costly for recipients.

"Both MGIB and REAP provide similar benefits to the Post-9/11 GI Bill," the report states. "Yet service members are enrolling and paying $1,200 for MGIB, while the Post-9/11 GI Bill is a more valuable benefit for most service members because there is no enrollment or fees."

If allowed to leave the Montgomery GI Bill, service members should receive a full or partial refund of what they paid to become eligible for the benefit, the commission said. In general, tuition assistance should be used for professional development and the Post-9/11 GI Bill should be used to for academic development while on active duty, it said.

The Post-9/11 GI Bill was a dramatic expansion of the benefit and sponsored by former Sen. James Webb, a one-time Democrat from Virginia and Navy secretary who's now exploring a run for the White House.

Under the legislation, after three years of service, troops are eligible for the maximum amount, which covers all tuition and fees for in-state students, or up to $19,198 a year for those costs at private or foreign schools. What's more, the assistance can be transferred to a recipient's spouse or children. This feature has been remarkably popular, especially among officers.

In a five-year period through September 2014, more than 423,000 service members transferred Post-9/11 GI Bill benefits to more than 928,000 dependents, the report states. Of those, 38.5 percent were officers and 61.5 percent were enlisted personnel, compared to an overall force that's 16.4 percent officers and 83.6 percent enlisted, it states.

Yet the commission proposed delaying the ability of troops to transfer the education benefit by four years because the existing timelines "are somewhat misaligned with retention goals."

Currently, troops who have served six years and commit to an additional four years may give all or part of the assistance to a family member. The panel recommended changing that so service members who have been in the military for 10 years and commit to another two years would be allowed to transfer the benefit.

"Offering transferability at 10 YOS instead of 6 would enable the Services to increase retention at this critical point in a military career," the report states.

It's worth noting that the proposed timeline fits with the panel's recommended changes to the retirement system to include a mid-career retention bonus at the 12-year mark.

After a dozen years of service, troops would be eligible for a lump-sum "continuation" payment equal to 2.5 months of basic pay for active-duty members, provided they agree to stay in the military for another four years. The payment is designed as a force-shaping tool to encourage service members to continue their military careers, officials said.

The commission also recommended adjusting the value of the Post-9/11 GI Bill benefit to eliminate the need for a housing stipend for dependents and, like other military education programs, preventing beneficiaries who are receiving a housing stipend to also draw unemployment compensation.